Income Inequality Threatens America’s Basic Economic and Political Systems

by Bruce Judson on October 29th, 2009

To mark the 80th Anniversary of the Great Crash of ‘29, Lynn Parramore, the editor of the New Deal 2.0 Blog at the Roosevelt Institute “asked 15 progressive thinkers to write about lessons learned and what lies ahead.” She concluded that, “Together, their reflections constitute a New Agenda for America — a message of how the ideals of a fair society should apply to the economic and social policies of our time.”

The Huffington Post featured this “New Agenda For America” on its front page and posted a giant graphic on the front page of the Business Section.

I was honored to be included in this list of distinguished Progressive thinkers, and a copy of my article, which originally appeared on the New Deal 2.0 Web site, appears below:

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Today, we have the highest level of income inequality in our nation’s recorded history. We must address the structural flaws in our economy that created, and continue to widen, this divide. History teaches that extreme inequality leads to political instability. We cannot assume that we are immune.

In President Obama’s words, the middle class is experiencing “the American Dream in reverse.” Rising long-term joblessness and the possibility of 13 million foreclosures (more than one in every four American mortgages) create the potential for the former middle class to move from frustration to anger — an anger sparked by reduced circumstances and the belief that they have been treated unfairly.

With each job loss or foreclosure, another family — now on a down-ward spiral — potentially loses its faith in our basic economic system and our basic system of governance. America’s ongoing vitality requires that people trust that these systems work, and that our democracy is self-correcting. With rising income inequality, this trust is now at risk.

America has never been a nation of haves and have nots. If the gulf widens, it’s hard to imagine that our future will be marked either by a healthy economy or a healthy democracy.

The only other time in our nation’s recorded history that income inequality approached current levels was 1928, just before the Great Crash. The New Deal eliminated the excesses of an unsustainable system. It was not easy then, and it will not be easy now. But, it is essential.